I've been saying for the last couple of weeks that the highs we have hit on the GDXJ will likely be the extent of the rally. A couple of weeks ago we opened at a high of 46.50 and reversed back down 3 points to close at 43.50. That was the first warning sign that the rally might be halting. Since, we have proceeded to consolidate under that level. Today, gold once again broke below 1300, and the gdxj sold off nearly 5% to close just above the low of the consolidation range which sits at about 40. Watch that level very carefully, a break below 40 surely spells out a continued decline to test the support levels of 38, 36 and possibly even 34. So long as it is able to remain above 40 though, then the bears haven't completely gained control. There would still be a chance we rally back to the highs and even break higher, but as I have been saying, I think it is unlikely. In the event of a break below 40, you have the opportunity to hedge the profits you made going up by opening a small short position. Buying an etf such as dust or jdst is an effective way to do this. This pullback will likely find its bottom in August, and begin to rally back going into September, which historically is a good month for gold. This will likely be the last pullback in gold stocks before a massive rally that will likely see a lot of junior miners double, so stay focused because opportunities like this don't come around too often. Onto the chart, you can see the consolidation zone's support and resistance points at 40 and about 46. The moving averages haven't quite crossed over, and macd is still hanging above the zero line, but a breach in price below that 40 level and all that will change. Watch carefully.
-Jonathan M Mergott
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